The resources of business

For ease of reference it is usual to divide the resources used by business into land, labour and capital. These are known as the factors of production.

1 Land is used to describe all natural resources – including those obtained from the sea! – such as minerals, wood, water and the land itself.

2 Labour describes the physical and mental skills of the population who are able to work.

3 Capital is used to describe all manufactured things which are used to produce other goods and services. This implies that at some time in the past people have sacrificed the opportunity to use some goods immediately (consume them) in return for a higher standard of living in the future.

4 Some economists would add enterprise (the ability and willingness to risk the loss of capital) to this list.

The classification of resources given above is a convenient shorthand for the very wide range of materials, machinery, skills and information a business imports from its environment. These are also known as inputs.

Of course not all businesses will require the same type of resource in the same quantities and at the same time. Some businesses need a small number of highly skilled people whilst others need large numbers of unskilled people. But all the businesses need the factors of production. This they have in common.

1. Formulate the main idea of the text.

2. Find in the text English equivalents of these words and phrases.

розподіляти, ділити(ся)	10. уміти працювати	19. стенографія
земля	11. виготовлені речі	20. матеріали
капітал, багатство	12.негайно, безпосередньо	21. машини
фактори виробництва	13. споживати	22. ділова обстановка, середовище
природні багатства	14. у відповідь	23. витрати
одержувати, здобувати	15.додавати, приєднувати	24. висококваліфіковані кадри
мінерали	16. здібність, здатність	25. некваліфіковані люди
дерево	17. готовність
фізичні та розумові здібності	18. втрата капіталу

3. Are these statements true or false? Correct the false ones.

1. Factors of production are resources used in any business activity.

2. There are many factors of production.

3. All natural resources are naturally-occurring goods such as soil and minerals that are used in the creation of products.

4. Labour shows the ability of the population to work.

5. Capital is the total stock of wealth owned by the business.

6. Capital is something that people never get back.

7. The classification of resources is used to reduce the range of inputs.

8. Some businesses require a lot of highly qualified people.

9. All businesses need a large number of unskilled people.

10. All businesses need resource inputs to produce goods and services.

4. Answer the questions.

1. What are the factors of production?

2. What does the term ‘labour” describe?

3. What does the capital describe?

4. Do all the businesses require the same type of resources in the same quantities?

5. How long do you think each input might stay in the business? Give reasons for your answer.

5. Group the following inputs into a business in terms of land, labour, capital and enterprise:

wood computer typist factory paper manager van plastic lathe food

Text 5.